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Item 1A. Risk Factors

2025-02-18 compared with 2024-02-20 · 130 added, 114 removed, 288 unchanged (46% of the section changed)

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Risks Related to Our Business and Operations

A material portion of our portfolio comprises office assets, which have generally experienced a decrease in demand and may experience a further decrease in demand that could have a material adverse effect on us.

Furthermore, the decline in the attractiveness of office assets, particularly combined with a lack of transactional activity and the current challenging capital markets could delay our capital recycling plans and our planned transition to majority multifamily.

A material portion of our portfolio comprises office assets, which, due to the increase in work-from-home policies and practices, have generally experienced a decrease in demand and may experience a further decrease in demand as some tenants do not renew leases as they expire or renew space with a smaller footprint, which could have a material adverse effect on us.

A material portion of our portfolio comprises office assets, which have generally experienced lower demand since early 2020 and may experience a further decrease in demand that could have a material adverse effect on us.

A material portion of our portfolio comprises office assets, which, due to the continued prevalence of work-from-home policies and practices, have generally experienced a decrease in demand and may experience a further decrease in demand as some tenants do not renew leases as they expire or renew space with a smaller footprint, which could have a material adverse effect on us.

Additionally, in the current climate where office assets are near cyclical lows with limited liquidity, we intend to focus in the near term on sourcing liquidity through the sale of multifamily assets, which would result in our office assets comprising a larger portion of our portfolio.

Demand for office space in the Washington, D.C.

metropolitan area and nationwide, including in our portfolio, has declined and may continue to decline due to increased usage of teleworking arrangements and more flexible work-from-anywhere policies leading to reconsiderations regarding amount of square footage needed (e.g.

certain tenants have reduced their leased square footage or advised us of their intention to do so), and cost cutting resulting from the pandemic, which could lead to continued lower office occupancy (as of December 31, 2023, 25.7% of our commercial and retail leases at our share, based on square footage, were scheduled to expire in 2024 or had month-to-month terms, and 6.8% were scheduled to expire in 2025), and new leasing has been slow to recover and will likely continue to lag due to delayed return-to-office plans and decision-making related to future office utilization.

Finally, a key demand driver in National Landing is the presence of Amazon’s headquarters, Phase I of which was completed in 2023.

Phase II has not yet commenced construction due to a pause announced by Amazon;

if Amazon determines to further delay construction, reduce the size of Phase II, or otherwise shrink its footprint in National Landing, that could have a material adverse impact on our plans for National Landing.

metropolitan area and nationwide, including in our portfolio, has remained relatively low and may continue to decline due to increased usage of teleworking arrangements and more flexible work-from-anywhere policies leading to reconsiderations regarding amount of square footage needed (e.g.

certain tenants have reduced their leased square footage or advised us of their intention to do so), and cost cutting, which could lead to continued lower office occupancy (as of December 31, 2024, 13.5% of our commercial and retail leases at our share, based on square footage, were scheduled to expire in 2025 or had month-to-month terms, and 4.4% were scheduled to expire in 2026), and new leasing has been slow to recover and may continue to lag due to delayed return-to-office plans and decision-making related to future office utilization.

Our portfolio of assets is geographically concentrated in Washington, D.C.

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We are particularly susceptible to adverse economic or other conditions in the Washington D.C.

metropolitan market (such as periods of economic slowdown or recession, business layoffs or downsizing, industry slowdowns, actual or anticipated federal government shutdowns, uncertainties related to federal elections, relocations of businesses, increases in real estate and other taxes, actual or perceived increases in retail theft and other crime, imposed curfews or states of security, and the cost of complying with governmental regulations or increased regulation), as well as to natural disasters (including earthquakes, floods, storms and hurricanes), utility outages (including electricity and drinking water), potentially adverse effects of climate change and other disruptions that occur in this market (such as terrorist activity or threats of terrorist activity and other events), any of which may have a greater impact on the value of our assets or on our operating results than if we owned a more geographically diverse portfolio.

metropolitan market (such as periods of economic slowdown or recession, business layoffs or downsizing, industry slowdowns, actual or anticipated federal government shutdowns, uncertainties related to federal elections, relocations of businesses or federal agencies and functions, increases in real estate and other taxes, actual or perceived increases in retail theft and other crime, imposed curfews or states of security, and the cost of complying with governmental regulations or increased regulation), as well as to natural disasters (including earthquakes, floods, storms and hurricanes), utility outages (including electricity and drinking water), potentially adverse effects of climate change and other disruptions that occur in this market (such as terrorist activity or threats of terrorist activity and other events), any of which may have a greater impact on the value of our assets or on our operating results than if we owned a more geographically diverse portfolio.

Additionally, acts of violence, including terrorist attacks in the Washington, D.C.

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metropolitan area as a whole also apply to the individual submarkets where our assets are located.

National Landing makes up more than half of our portfolio based on square footage at our share.

Portions of our markets, including National Landing, have underperformed other markets in the region with respect to rent growth and occupancy.

National Landing makes up approximately 75% of our portfolio based on square footage at our share, and we expect that percentage to increase in the coming years.

Any adverse economic or other conditions in the Washington, D.C.

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Any curtailment of federal government spending, whether due to a change of presidential administration or control of Congress, federal government sequestrations, furloughs or shutdowns, a slowdown of the U.S.

and/or global economy, any change in federal government agencies work-from-home policies or uses of office space or other factors, could have an adverse impact on real estate values and property development in the Washington, D.C.

and/or global economy, any change in federal government agencies work-from-home policies or uses of office space, relocation of federal agencies and functions, or other factors, could have an adverse impact on real estate values and property development in the Washington, D.C.

metropolitan area, on demand and willingness to enter into long-term contracts for office space by the federal government and companies dependent upon the federal government, as well as on occupancy rates and annualized rents of multifamily and retail assets by occupants or patrons whose employment is by or related to the federal government.

For instance, certain of our GSA tenants reduced their leased square footage.

For instance, certain of our GSA tenants have reduced their leased square footage.

Any such curtailments in federal spending or changes in federal leasing policy could occur in the future, which could have a material adverse effect on us.

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The impact of Amazon's headquarters in National Landing is difficult to forecast and quantify and may differ from what we, financial or industry analysts or investors anticipate and have anticipated since Amazon’s November 2018 announcement that it had selected sites in National Landing as the location of its new headquarters.

We have significant exposure to Amazon, both as a result of their status as a tenant and as a result of fees we expect to continue to receive from them as developer, property manager, and retail leasing agent for the company’s new headquarters at National Landing.

As of December 31, 2023, we have leases with Amazon across five office buildings in National Landing totaling approximately 927,000 square feet with annualized rent totaling $41.6 million, of which 191,000 square feet are month-to-month and 378,000 square feet expire in 2024.

Of the month-to-month leases and leases expiring in 2024, 444,000 square feet represent the entirety of 1800 South Bell Street and 2100 Crystal Drive.

1800 South Bell Street was taken out of service in the first quarter of 2024, and we plan to take 2100 Crystal Drive out of service when Amazon vacates in the second quarter of 2024.

We have significant exposure to Amazon as a tenant and as a result of fees we expect to receive from them as developer, property manager, and retail leasing agent for the company’s headquarters at National Landing.

As of December 31, 2024, we have leases with Amazon in two office buildings in National Landing totaling approximately 357,000 square feet with annualized rent totaling $16.6 million.

If Amazon invests less than the announced amounts in National Landing or makes such investment over a longer period than anticipated, if its business prospects decline, if it reduces the size of its workforce in National Landing below initially anticipated levels or further delays hiring or if it leases, releases or develops less square footage than anticipated, our ability to achieve the benefits associated with Amazon's headquarters location in National Landing could be adversely affected.

If we, Virginia Tech, Amazon, federal, state and local governments do not make the anticipated investments, including infrastructure investments, that would directly benefit National Landing, we could be adversely affected.

If we, Virginia Tech, Amazon, federal, state and local governments do not make all the anticipated investments, including infrastructure investments, that would directly benefit National Landing, we could be adversely affected.

Furthermore, Amazon's headquarters may not have the anticipated collateral financial effect on the National Landing submarket.

If we do not achieve the perceived benefits of such location as rapidly or to the extent anticipated by us, financial or industry analysts or investors, we and potentially the market price of our common shares could be adversely affected.

If we are unable to re-lease that space at attractive rents, it could have a material adverse effect on us and the market price of our common shares.

Additionally, if the Virginia Tech Innovation Campus reduces its contemplated size, further delays its opening, or does not have the anticipated collateral financial effect, or if any of our other key demand drivers in National Landing fail to materialize, it could have a material adverse effect on us.

Additionally, if the Virginia Tech Innovation Campus reduces its contemplated size or does

not have the anticipated collateral financial effect, or if any of our other key demand drivers in National Landing fail to materialize, it could have a material adverse effect on us.

We derive a significant portion of our revenue from U.S.

federal government tenants, and we may face additional risks and costs associated with directly managing assets occupied by government tenants.

For the year ended December 31, 2023, 23.0% of the rental revenue from our commercial segment was generated by rentals to federal government tenants, and federal government tenants historically have been a significant source of new leasing for us.

For the year ended December 31, 2023, GSA was our largest single tenant, with 37 leases comprising 22.7%

of total annualized rent at our share.

The occurrence of events that have a negative impact on the demand for federal government office space, such as a decrease in federal government payrolls or a change in policy that prevents governmental tenants from renting our office space, would have a much larger adverse effect on our revenue than a corresponding occurrence affecting other categories of tenants.

For the year ended December 31, 2024, 11.9% of our total revenue was generated by commercial rentals to federal government tenants, and federal government tenants historically have been a significant source of new leasing for us.

For the year ended December 31, 2024, GSA was our largest single tenant, with 31 leases comprising 25.2% of total annualized rent at our share.

The occurrence of events that have a negative impact on the demand for federal government office space, such as a decrease in federal government payrolls or a change in policy that prevents governmental tenants from renting our office space or relocation of federal agencies and functions away from the Washington, D.C.

region, would have a much larger adverse effect on our revenue than a corresponding occurrence affecting other categories of tenants.

Additionally, a federal government shutdown could delay or prevent us from collecting rent payments from our federal government tenants.

If demand for federal government office space were to decline, it would be more difficult for us to lease our buildings and could reduce overall market demand and corresponding rental rates, all of which could have a material adverse effect on us.

For example, we have been notified by various GSA tenants that they are vacating their space totaling approximately 293,000 square feet in 2024.

For example, we have been notified by a GSA tenant that they are vacating their space totaling approximately 88,000 square feet in 2025.

Additionally, the recent change of presidential administration has placed increased focus on reduction of government spending, which could impact U.S.

federal government leasing practices and upcoming renewals.

During the next four years (2025 to 2029), we have 20 leases, totaling approximately 542,000 square feet at our share, with U.S.

federal government tenants that will expire.

Lease agreements with these federal government agencies contain provisions required by federal law, which require, among other things, that the lessor of the property agree to comply with certain rules and regulations, including rules and regulations related to audits and records and subcontractor cost or pricing data.

In addition, there are additional requirements relating to the potential application of equal opportunity provisions and related requirements to prepare written affirmative action plans applicable to government contractors and subcontractors.

Some of the factors used to determine whether these requirements apply to a company that is affiliated with the actual government contractor (the legal entity that is the lessor under a lease with a federal government agency) include whether such company and the government contractor are under common ownership, have common management, and are under common control.

We own the entity that is the government contractor and the property manager, increasing the risk that requirements of the Employment Standards Administration's Office of Federal Contract Compliance Programs and requirements to prepare affirmative action plans pursuant to the applicable executive order may be determined to be applicable to us.

Compliance with these regulations is costly and any increase in regulation could increase our costs, which could have a material adverse effect on us.

In addition, there are requirements relating to the potential application of equal opportunity provisions and related anti-discrimination requirements, including but not limited to, the Civil Rights Act of 1964, the Vietnam Era Veterans’ Readjustment Assistance Act, the Rehabilitation Act of 1973, and the Randolph-Sheppard Act.

We are also prohibited from implementing any programs promoting diversity, equity and inclusion that violate any applicable federal anti-discrimination laws.

Compliance with these requirements is costly and any increase or significant change in regulation could increase our costs, which could have a material adverse effect on us.

Rent control or rent stabilization legislation and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our residents.

Certain jurisdictions in which we own property have adopted, or may in the future adopt, laws and regulations imposing restrictions on the timing or amount of rent increases or have imposed regulations relating to low- and moderate-income housing.

Such laws and regulations limit our ability to charge market rents, increase rents or evict residents at our multifamily assets and could make it more difficult for us to dispose of properties in certain circumstances.

In addition, some U.S.

jurisdictions have adopted regulations regarding the use of algorithmic devices or systems when making decisions regarding rents or occupancy.

While the Washington D.C.

region does not currently have such regulation, it is possible that one or more of the jurisdictions within the Washington D.C.

region where we own assets could adopt similar regulations in the future.

Similarly, compliance procedures associated with rent control statutes and low- and moderate-income housing regulations could have a negative impact on our operating costs, and any failure to comply with low- and moderate-income housing regulations could result in the loss of certain tax benefits and the forfeiture of rent payments.

In addition, such low- and moderate-income housing regulations often require us to rent a certain number of units at below-market rents, which has a negative impact on our ability to increase cash flows from our multifamily assets subject to such regulations.

Furthermore, such regulations may negatively impact our ability to attract higher-paying residents to such properties.

As of December 31, 2024, all of our multifamily assets located within the Washington, D.C.

metro region were subject to such regulations.

We are exposed to risks associated with real estate development and redevelopment, such as unanticipated expenses, delays and other contingencies, any of which could have a material adverse effect on us.

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● construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable;

● inflation could increase the costs of construction and development projects, which could decrease the yield on such projects, delaying their commencement or resulting in fewer such pursuits.

● inflation and domestic tariff policies could increase the costs of construction and development projects, which could decrease the yield on such projects, delaying their commencement or resulting in fewer such pursuits.

In 2023, these conditions made new development starts infeasible;

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Where we are a limited partner or non-managing member in any partnership or limited liability company, if the entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in that entity, including by contributing our interest to a subsidiary of ours that is subject to corporate level income tax.

Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or trustees from focusing their time and effort on our business.

our business.

In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers.

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A substantial decline in the revenue generated by one or more of these assets could have a material adverse effect on us.

Our Placemaking depends in significant part on a retail component, which frequently involves retail assets embedded in or adjacent to our multifamily assets and/or commercial assets, making us subject to risks that affect the retail environment generally, such as competition from discount and online retailers, weakness in the economy, fluctuations in foot traffic, pandemics, a decline in consumer spending and the financial condition of major retail tenants, any of

which could adversely affect market rents for retail space and the willingness or ability of retailers to lease space in our retail assets.

If our retail assets lose tenants, whether to the proliferation of online businesses and discount retailers, a decline in general economic conditions and consumer spending or otherwise, it could have a material adverse effect on us.

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The actual density of our development pipeline and/or any development parcel may not be consistent with our estimated potential development density.

As of December 31, 2023, we estimate that our 17 assets in the development pipeline will total 10.8 million square feet (8.8 million square feet at our share) of estimated potential development density.

As of December 31, 2024, we estimate that our 19 assets in our development pipeline will total 11.0 million square feet (8.9 million square feet at our share) of estimated potential development density.

The potential development density estimates for our development pipeline and/or any particular development parcel are based solely on our estimates, using data available to us, and our business plans as of December 31, 2024.

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Although we have implemented processes, procedures and controls to help mitigate the risks associated with a cyber incident, there can be no assurance that these measures will be sufficient for all possible situations.

Even security measures

that are appropriate, reasonable and/or in accordance with applicable legal requirements may not be sufficient to protect the information we maintain.

Even security measures that are appropriate, reasonable and/or in accordance with applicable legal requirements may not be sufficient to protect the information we maintain.

Unauthorized parties, whether within or outside our company, may disrupt or gain access to our systems, or those of third parties with whom we do business, through human error, misfeasance, fraud, trickery, or other forms of deceit, including break-ins, use of stolen credentials, social engineering, phishing, computer viruses or other malicious codes, and similar means of unauthorized and destructive tampering.

We and our third-party providers have been the target of cybersecurity threats and we expect them to continue.

As of December 31, 2024, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected us, including our business strategy, results of operations or financial condition.

A successful attack on one of our service providers could result in a compromise of our own network, theft of our data, legal obligations or liabilities, deployment of ransomware or a disruption in our supply chain or of services upon which we rely.

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If any of the foregoing risks materialize, it could have a material adverse effect on us.

Pandemics and other health concerns, including COVID-19, could have a negative effect on our business, results of operations, cash flows and financial condition.

Pandemics, including COVID-19, as well as both future widespread and localized outbreaks of infectious diseases and other health concerns, and the measures taken to prevent the spread or lessen the impact, could cause a material disruption to multifamily and office industry or the economy as a whole.

Pandemics and other health concerns could have a negative effect on our business, results of operations, cash flows and financial condition.

Pandemics as well as both future widespread and localized outbreaks of infectious diseases and other health concerns, and the measures taken to prevent the spread or lessen the impact, could cause a material disruption to multifamily and office industry or the economy as a whole.

The impacts of such events could be severe and far-reaching, and may impact our operations in several ways.

Additionally, pandemic outbreaks could lead governments and other authorities around the world, including federal, state and local authorities in the United States, to impose new or heightened measures intended to mitigate its spread, including restrictions on freedom of movement and business operations such as issuing guidelines, travel bans, border closings, business closures, quarantine orders, and orders not allowing the collection of rents, rent increases, or eviction of non-paying tenants.

Additionally, pandemic outbreaks could lead governments and other authorities around the

world, including federal, state and local authorities in the United States, to impose new or heightened measures intended to mitigate its spread, including restrictions on freedom of movement and business operations such as issuing guidelines, travel bans, border closings, business closures, quarantine orders, and orders not allowing the collection of rents, rent increases, or eviction of non-paying tenants.

In the event of a decline in business activity and demand for real estate transactions, our ability or desire to grow or diversify our portfolio could be affected.

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Moreover, many of the other risk factors described herein could be more likely to impact us as a result of a pandemic or measures intended to curb its spread.

Increased focus on our ESG business values may constrain our business operations, impose additional costs and expose us to new risks that could have a material adverse effect on us.

Our business values integrate environmental sustainability, social responsibility, D&I and strong governance practices throughout our organization—these types of ESG matters have become increasingly important to investors and other stakeholders.

Increased focus on our sustainability business values may constrain our business operations, impose additional costs and expose us to new risks that could have a material adverse effect on us.

Our business values integrate environmental sustainability, social responsibility and strong governance practices throughout our organization—these types of matters have become increasingly important to investors and other stakeholders.

Some investors may use these factors to determine their investment strategies, while current and potential employees and business partners may consider these factors when considering relationships with us.

Certain organizations that provide corporate risk and corporate governance advisory services to investors have developed scores and ratings to evaluate companies based upon ESG metrics, and investors may consider a company's score as a factor in making an investment decision.

There can be no assurance that our focus on our ESG business values will be well regarded by investors, particularly since the criteria by which companies are rated for their ESG efforts may change.

Additionally, focus and activism related to ESG matters may constrain our business operations or increase expenses, and we may face reputational damage if our corporate responsibility initiatives do not meet the standards set by various constituencies, including those of third-party providers of corporate responsibility ratings and reports.

A low ESG score could result in a negative perception of us, exclusion of our securities from consideration by certain investors and/or cause investors to reallocate their capital away from us, each of which could have an adverse impact on the price of our securities.

As we continue to integrate environmental sustainability, social responsibility, D&I and strong governance practices throughout our organization, we could also be criticized by ESG detractors for the scope or nature of our ESG initiatives

We could also encounter negative reactions from governmental actors (such as anti-ESG legislation or retaliatory legislative treatment), tenants and residents, that that could have a material adverse effect on us.

Certain organizations that provide corporate risk and corporate governance advisory services to investors have developed scores and ratings to evaluate companies based upon these metrics, and investors may consider a company's score as a factor in making an investment decision.

There can be no assurance that our focus on our sustainability business values will be well regarded by investors, particularly since the criteria by which companies are rated for their sustainability efforts may change.

Additionally, focus and activism related to sustainability matters may constrain our business operations or increase expenses, and we may face reputational damage if our corporate responsibility initiatives do not meet the standards set by various constituencies, including those of third-party providers of corporate responsibility ratings and reports.

A low sustainability score could result in a negative perception of us, exclusion of our securities from consideration by certain investors and/or cause investors to reallocate their capital away from us, each of which could have an adverse impact on the price of our securities.

As we continue to integrate environmental sustainability, social responsibility and strong governance practices throughout our organization, we could also be criticized for the scope or nature of our initiatives or goals.

We could also encounter reactions from governmental actors (such as anti-environmental, social and governance legislation or retaliatory legislative treatment), tenants and residents, that could have a material adverse effect on us.

We face risks related to multifamily rental antitrust, regulatory scrutiny and related litigation.

Lawsuits, government investigations and proposed legislation relating to antitrust matters in the multifamily rental market are ongoing and may impact us, whether or not we are found directly liable for an antitrust violation.

For example, in November 2023, the District of Columbia filed a lawsuit in the Superior Court of the District of Columbia against RealPage, Inc., a provider of revenue management systems, numerous multifamily rental companies, and 14 owners and/or operators of multifamily housing in the District of Columbia, including JBG Associates, L.L.C., one of our subsidiaries, alleging that the defendants violated the District of Columbia Antitrust Act by unlawfully agreeing to use RealPage, Inc.

revenue management systems and sharing sensitive data.

While we intend to vigorously defend against this lawsuit, given the current stage of the District of Columbia’s lawsuit, we are unable to predict the outcome or estimate the amount of loss, if any, that may result from the lawsuit.

We are also aware that governmental investigations regarding antitrust matters in the multifamily industry are ongoing.

Individual classes, municipalities other than the District of Columbia or federal agencies may also bring suits against multifamily rental providers.

Regardless of whether we remain named in the District of Columbia lawsuit or any other lawsuits or become the focus of any governmental investigation, we may incur substantial costs related to these lawsuits, whether as a defendant or as a third-party witness.

Additionally,

settlements by RealPage, Inc.

or other defendants in such cases could impact the multifamily industry in ways that have an adverse effect on us.

Moreover, if state and/or federal legislation regulating the use of third-party algorithmic revenue management systems by multifamily apartment rental companies is passed, the impact to us is difficult to predict.

Lawsuits, government investigations and new legislation related to antitrust matters may, among other things, be costly to comply with, result in negative publicity, require significant management time and attention and subject us to remedies or burdensome requirements that adversely affect our business.

We face risks related to the real estate industry.

As a REIT we are subject to significant risks related to the real estate industry, any of which could have a material adverse effect on us.

We are subject to significant risks related to the real estate industry, any of which could have a material adverse effect on us.

These include, among other things:

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Additionally, we may be unable to identify, negotiate, finance or consummate acquisitions of properties, or acquire properties on favorable terms, or at all.

● The composition of our portfolio by asset type is likely to continue to change over time, which could expose us to different asset class risks than if our portfolio composition remained static, and we may be adversely affected by trends in the asset classes we currently own.

● The composition of our portfolio by asset type is likely to continue to change over time, which could expose us to different asset class risks than if our portfolio composition remained static or cause certain risks within an asset class to become more or less important as our composition changes, and we may be adversely affected by trends in the asset classes we currently own.

● We may not be able to control the operating expenses associated with our properties, which include real estate taxes, insurance, loan payments, maintenance, and costs of compliance with governmental regulation, or our operating expenses may remain constant or increase, even if our revenue does not increase, which could have a material adverse effect on us.

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● We may be unable to renew leases, lease vacant space or re-let space as leases expire, or do so on favorable terms, which could have a material adverse effect on us.

As of December 31, 2023, leases representing 25.7% of our share of the office and retail square footage in our Operating Portfolio were scheduled to expire in 2024 or have month-to-month terms, 6.8% were scheduled to expire in 2025, and 14.4% of our share of the square footage of the assets in our commercial portfolio was unoccupied and not generating rent.

As of December 31, 2024, leases representing 13.5% of our share of the office and retail square footage in our Operating Portfolio were scheduled to expire in 2025 or have month-to-month terms, 4.4% were scheduled to expire in 2026, and 22.1% of our share of the office and retail square footage in our Operating Portfolio was unoccupied and not generating rent.

We may find it necessary to make rent or other concessions and/or significant capital expenditures to improve our assets to retain and attract tenants.

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● We may from time to time be subject to litigation, which may significantly divert the attention of our officers and/or trustees and result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance, any of which could have a material adverse effect on us.

For example, we are currently a defendant in an antitrust lawsuit, brought by the Washington, D.C.

Attorney General, involving RealPage, which is one of our vendors, alleging that RealPage and lessors of multifamily residential real estate conspired, principally in connection with the alleged use of RealPage revenue management systems, to artificially inflate the rental rates for multifamily residential real estate above competitive levels.

● We own leasehold interests in certain land on which some of our assets are located.

If we default under the terms

of any of these ground leases, we may be liable for damages and could lose our leasehold interest in the property or our option to purchase the underlying fee interest in such asset.

In addition, unless we purchase the underlying fee interests in the land on which a particular property is located, we will lose our right to operate the property or we will continue to operate it at much lower profitability, which would significantly adversely affect our results of operations.

If we default under the terms of any of these ground leases, we may be liable for damages and could lose our leasehold interest in the property or our option to purchase the underlying fee interest in such asset.

In addition, unless we purchase the underlying fee interests in the land on which a particular property is located, in the future, we will lose our right to operate the property or we will continue to operate it at much lower profitability, which would significantly adversely affect our results of operations.

In addition, if we are perceived to have breached the terms of a ground lease, the fee owner may initiate proceedings to terminate the lease.

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Any of the foregoing could have a material and adverse effect on us.

We may incur significant costs to comply with environmental laws, and environmental contamination may impair our ability to lease and/or sell real estate.

Our operations and assets are subject to various federal, state and local laws and regulations concerning the protection of the environment including air and water quality, hazardous or toxic substances and health and safety.

Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property.

The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination.

These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused such release.

We may incur significant costs to comply with environmental laws, and environmental contamination may impair our ability to lease, develop and/or sell real estate.

Our operations and assets, and the operations of our tenants, are subject to various federal, state and local laws and regulations concerning the protection of the environment including air and water quality, hazardous or toxic substances and health and safety.

The cost to comply with such requirements may be significant and if we fail to comply with such requirements, we could be subject to significant fines.

Moreover, environmental requirements have and may continue to become increasingly stringent, and our costs or operating restrictions may increase as a result.

Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate, clean up, or remediate hazardous or toxic substances and petroleum products released at or from that property, or to pay for the costs of the same.

The owner or operator may also be held liable to a governmental entity or to third parties for property damage, natural resources damages, or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination.

These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused such release, and the liability may be joint and several.

The presence of contamination or the failure to remediate contamination may (i) expose us to third-party liability (e.g., for cleanup costs, natural resource damages, bodily injury or property damage), (ii) subject our properties to liens in favor of the government for damages and costs the government incurs in connection with the contamination, (iii) result in restrictions on the manner in which a property may be used or businesses may be operated, or (iv) impair our ability to sell or lease real estate or to borrow using the real estate as collateral.

To the extent we send contaminated materials to other locations for treatment or disposal, we may be liable for cleanup of those sites if they become contaminated.

Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling, and also govern emissions of and exposure to asbestos fibers in the air.

The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws.

To the extent we arrange for contaminated materials to be sent to other locations for treatment or disposal, we may be liable for cleanup of those sites if they become contaminated, without regard to whether we complied with environmental laws in doing so.

Other laws and regulations require proper management and maintenance of any known or presumed asbestos-containing materials, can require their abatement or removal in the event of damage, demolition, renovation or remodeling, and also govern emissions of and exposure to asbestos fibers in the air.

In addition, the maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws.

We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals.

Our predecessor companies may be subject to similar liabilities for activities of those companies in the past.

We may be subject to similar liabilities for activities of our predecessor companies conducted in the past.

We could incur fines for environmental noncompliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or related claims arising out of environmental contamination or human exposure at or from our assets.

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To date, these environmental assessments have not revealed any environmental condition material to our business.

However, identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination, human exposure to contamination or changes in cleanup or compliance requirements could result in significant costs to us.

However, we cannot give assurance that these environmental assessments have revealed all potential environmental liabilities, and identification of new compliance concerns or undiscovered areas of contamination, changes in the extent or known scope of contamination,

human exposure to contamination or changes in cleanup or compliance requirements could result in significant costs to us or operating restrictions on our properties.

In addition, we may become subject to costs or taxes, or increases therein, associated with natural resource or energy usage (such as a "carbon tax").

These costs or taxes could increase our operating costs and decrease the cash available to pay our obligations or distribute to equity holders.

Increasingly competitive labor markets and our need to provide additional incentives to remain competitive in our hiring and retention efforts may hurt our ability to effectively operate our business and have a negative effect on our business, results of operations, cash flows, and financial condition.

Our success depends on our ability to continue to attract, retain and motivate qualified personnel, but we may not be able to do so on acceptable terms or at all.

Recently, the U.S.

job market has experienced labor shortages, resulting in intense competition for retaining and hiring skilled employees.

Additionally, the competitive labor conditions have significantly increased compensation expectations for our existing and prospective personnel.

If we are unable to hire and retain qualified personnel as required for our operations, our business, results of operations, cash flows and financial condition could be adversely affected.

Risks Related to the Capital Markets and Related Activities

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the risk that future offerings of debt or preferred equity securities, which would be senior to our common shares upon liquidation, and in the case of preferred equity securities may be senior to our common shares for purposes of dividend distributions or upon liquidation, may adversely affect the per share trading price of our common shares;

and the risk that the announcement of a material acquisition may result in a rapid and significant decline in the price of our common shares.

the risk that our repurchase program may result in our shares being less liquid than they have been in the past;

and the risk that the announcement of a material change may result in a rapid and significant decline in the price of our common shares.

If any of the foregoing risks materialize, it could have a material adverse effect on us.

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Any of the foregoing could affect our ability to obtain additional funds as needed, or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs or to finance our future acquisition and development activities.

We may not be able to obtain capital to make investments.

We may not be able to obtain capital to make investments and/or obtaining that capital could fundamentally change the composition of our portfolio.

We are primarily dependent on external capital to fund the expected growth of our business.

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There can be no assurance that new capital will be available or available on acceptable terms.

Our future development plans are capital intensive.

To complete these plans, we anticipate funding construction and development through asset sales, real estate ventures with third parties, recapitalizations of assets, and public or private securities offerings, or a combination thereof.

Similarly, these plans require a significant amount of debt financing which subjects us to additional risks, such as rising interest rates.

Our future plans, including share repurchases and development, are capital intensive.

We anticipate funding these plans through asset sales, real estate ventures with third parties, recapitalizations of assets, and public or private securities offerings, or a combination thereof.

To the extent we dispose of assets to fund our development and investment plans, we may dispose of multifamily, commercial, and/or retail assets as well as land, but expect, in the current environment, to source liquidity from our multifamily assets in Washington, D.C.

Depending on the type of assets we sell and extent of these sales, the composition of our portfolio could change significantly such that we may no longer be a mixed-asset real estate company, and depending on the resulting proportion of our office to multifamily assets, our portfolio may be viewed less favorably by investors and the capital markets, which could have an adverse effect on our ability to continue to raise capital to fund our business.

Our development and investment plans may also require a significant amount of debt financing which subjects us to additional risks, such as rising interest rates.

For information about our available sources of funds, see "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" and the notes to the consolidated financial statements included herein.

The liquidity of our common shares may decline as a result of our continued repurchase of our common shares.

Since launching our share repurchase program in 2020 through December 31, 2024, we have repurchased and retired 56.8 million common shares, which is 38% of the common shares and OP units outstanding as of December 31, 2019, for $1.1 billion, a weighted average purchase price per share of $19.87.

In February 2025, our Board of Trustees increased our common share repurchase authorization from $1.5 billion to $2.0 billion.

As a result of these repurchases, the ability of holders of common shares to buy and sell their common shares may have declined and may continue to decline as a result of future repurchases.

We are subject to interest rate risk, which could increase our interest expense, increase the cost to refinance and increase the cost of issuing new debt.

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We may enter into hedging transactions to protect ourselves from the effects of interest rate fluctuations on floating rate debt.

As of December 31, 2023, our hedging transactions included interest rate cap agreements, which covered $466.1 million of our outstanding consolidated debt, a significant portion of which is with one counterparty, which also exposes us to counterparty risk.

As of December 31, 2024, our hedging transactions included interest rate cap agreements, which covered $442.0 million of our outstanding consolidated debt, primarily with two counterparties, which also exposes us to counterparty risk.

Interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates, which could reduce the overall returns on our investments.

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In addition, although the asset management and property management fees associated with the JBG Excluded Assets were assigned to us upon completion of the Formation Transaction, the general partner and managing member interests in the JBG Legacy Funds held by former JBG executives (who became members of our management team) and certain trustees were not transferred to us and remain under the control of these individuals.

Our management's time and efforts may be diverted from the management of our assets to management of the JBG Legacy Funds, which could adversely affect the execution of our business plan and our results of operations and cash flow.

Our management's

time and efforts may be diverted from the management of our assets to management of the JBG Legacy Funds, which could adversely affect the execution of our business plan and our results of operations and cash flow.

Members of our senior management and certain trustees have an ownership interest in the JBG Legacy Funds and own carried interests in each fund and in certain of our real estate ventures that entitle them to receive additional compensation if the fund or real estate venture achieves certain return thresholds.

Additionally, in the future, we may elect to assign to certain employees a percentage of third-party fees, carried interests or other equity interests in certain assets, joint ventures or other real estate ventures.

As a result, such employees could be incentivized to spend time and effort maximizing the

cash flow from the assets being retained by the JBG Legacy Funds or other relevant real estate ventures in which they have an ownership or other interest, including through sales of assets, which may, for example, accelerate payments of the carried interest but would reduce the asset management and other fees that would otherwise be payable to us with respect to the JBG Excluded Assets.

As a result, such employees could be incentivized to spend time and effort maximizing the cash flow from the assets being retained by the JBG Legacy Funds or other relevant real estate ventures in which they have an ownership or other interest, including through sales of assets, which may, for example, accelerate payments of the carried interest but would reduce the asset management and other fees that would otherwise be payable to us with respect to the JBG Excluded Assets.

These actions could adversely impact our results of operations and cash flow.

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For example, we have entered, and in the future may enter into transactions with the JBG Legacy Funds, such as purchasing assets from them.

Any such transaction creates a conflict of interest as a result of our management team's interests on both sides of the transaction, because we manage the JBG Legacy Funds and because members of our management and Board of Trustees own interests in the general partner or other managing entities of the funds.

Any such transaction creates a conflict of interest as a result of our management team's interests on both sides of the transaction because we manage the JBG Legacy Funds and because members of our management and Board of Trustees own interests in the general partner or other managing entities of the JBG Legacy Funds.

Any of the above-described conflicts of interest could have a material adverse effect on us.

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Provisions of MGCL could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that might involve a premium price for our common shares or that our shareholders might otherwise believe to be in their best interest.

Provisions of the MGCL, may have the effect of inhibiting

a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of common shares with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

Provisions of the MGCL may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of common shares with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

● provisions that prohibit business combinations between us and an "interested shareholder," defined generally as any holder or affiliate of any holder who beneficially owns 10% or more of the voting power of our shares, for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter impose fair price and/or supermajority shareholder voting requirements on these combinations;

● provisions that provide that a shareholder's "control shares" acquired in a "control share acquisition," as defined in the MGCL, have no voting rights, except to the extent approved by our shareholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

As permitted by the MGCL, we have elected in our bylaws to opt out of the business combination and control share provisions of the MGCL.

As permitted by the MGCL, we have elected to opt out of the business combination and control share provisions of the MGCL.

However, we cannot assure you that our Board of Trustees will not opt to be subject to such provisions of the MGCL in the future, including opting to be subject to such provisions retroactively.

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In addition, the operating agreements governing some of our subsidiaries which are parties to real estate joint ventures may have restrictions on distributions which could limit the ability of those subsidiaries to make distributions to JBG SMITH LP.

Thus, JBG SMITH LP's ability to make distributions to holders of its units, including us, depends on its subsidiaries' ability first to satisfy their obligations to their creditors, and then to

make distributions to holders of its units.

Thus, JBG SMITH LP's ability to make distributions to holders of its units, including us, depends on its subsidiaries' ability first to satisfy their obligations to their creditors, and then to make distributions to holders of its units.

Likewise, our ability to pay dividends depends on JBG SMITH LP's ability first to satisfy its obligations, if any, to its creditors and make distributions payable to holders of preferred units (if any), and then to make distributions to us.

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In addition, our declaration of trust and indemnification agreements require us to indemnify our trustees and officers (in some cases, without requiring a preliminary determination of the trustee's or officer's ultimate entitlement to indemnification) for actions taken by them in those and certain other capacities to the maximum extent permitted by MGCL.

The Maryland REIT law permits a REIT to indemnify and advance expenses to its trustees, officers, employees and agents to the same extent as permitted by the MGCL for directors and officers of a Maryland corporation.

The Maryland REIT law permits a real estate investment trust to indemnify and advance expenses to its trustees, officers, employees and agents to the same extent as permitted by the MGCL for directors and officers of a Maryland corporation.

Generally, MGCL permits a Maryland corporation to indemnify its present and former directors and officers except in instances where the person seeking indemnification acted in bad faith or with active and deliberate dishonesty, actually received an improper personal benefit in money, property or services or, in the case of a criminal proceeding, had reasonable cause to believe that his or her actions were unlawful.

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If, with respect to any taxable year, we fail to maintain our qualification as a REIT and do not qualify under the relevant statutory relief provisions, we would have to pay federal income tax on our taxable income at regular corporate rates, could not deduct our distributions in determining our taxable income subject to tax, and would possibly also be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the nondeductible 1% excise tax on certain stock repurchases.

If we had to pay federal income tax, the amount of money available to distribute to shareholders and pay our indebtedness would be reduced for the year or years involved, and we would not be required to make distributions to shareholders in that taxable year and in future years until we again were able to qualify as a REIT.

that taxable year and in future years until we again were able to qualify as a REIT.

In addition, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost, unless we were entitled to relief under the relevant statutory provisions.

Our REIT status is also dependent upon the REIT qualification of any REIT subsidiary in which we invest.

REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan or require us to make distributions of our shares or other securities .

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From time to time, we may generate taxable income greater than our cash flow.

If we do not have other funds available, we could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices, distribute amounts that

would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, or make taxable distributions of our shares to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and a 4% excise tax in a particular year.

If we do not have other funds available, we could be required to borrow funds on unfavorable terms, sell assets at disadvantageous prices, distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, or make taxable distributions of our shares to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and a 4% excise tax in a particular year.

These alternatives could increase our costs or reduce our equity.

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In addition, a 100% excise tax will be imposed on certain transactions between us and our TRSs that are not conducted on an arm's length basis.

Risks Related to the Formation Transaction

We could be required to indemnify Vornado for certain material tax obligations that could arise as addressed in the Tax Matters Agreement and certain obligations under the Separation and Distribution Agreement.

Furthermore, Vornado agreed to indemnify us for certain pre-distribution liabilities and liabilities related to Vornado assets and there can be no assurance that these obligations will be sufficient to protect us.

Additionally, there may be undisclosed liabilities of the Vornado and JBG assets contributed to us in the Formation Transaction that might expose us to potentially large, unanticipated costs.

Under the Tax Matters Agreement that we entered into with Vornado, we may be required to indemnify Vornado against any taxes and related amounts and costs if the distribution of JBG SMITH shares by Vornado, together with certain related transactions, is not tax-free and that treatment results from (i) actions or failures to act by us, or (ii) our breach of certain representations or undertakings.

The Separation Agreement provides for indemnification obligations designed to make us financially responsible for substantially all liabilities that may exist relating to our business activities, whether incurred prior to or after the Formation Transaction, as well as those obligations of Vornado that we assumed pursuant to the Separation Agreement.

If we are required to indemnify Vornado under the circumstances set forth in the Tax Matters Agreement or the Separation Agreement, we may be subject to substantial liabilities.

Pursuant to the Separation Agreement, Vornado agreed to indemnify us for certain liabilities.

However, third parties could seek to hold us responsible

for any of the liabilities that Vornado agreed to retain, and there can be no assurance that Vornado will be able to fully satisfy its indemnification obligations.

Moreover, even if we ultimately succeed in recovering from Vornado any amounts for which we are held liable, such indemnification may be insufficient to fully offset the financial impact of such liabilities and/or we may be temporarily required to bear these losses while seeking recovery from Vornado.

Additionally, prior to entering into the MTA, the diligence reviews performed by each of Vornado and JBG with respect to the business and assets of the other were necessarily limited in nature and scope and may not have adequately uncovered all of the contingent or undisclosed liabilities that we assumed in connection with the Formation Transaction, many of which may not be covered by insurance.

The MTA does not provide for indemnification for these types of liabilities by either party post-closing, and, therefore, we may not have any recourse with respect to such unexpected liabilities.

Any such liabilities could cause us to experience losses, which may be significant, which could have a material adverse effect on us.

Unless Vornado and JBG SMITH were both REITs following the Separation, JBG SMITH could be required to recognize certain corporate-level gains for tax purposes as a result of the Separation.

We believe that each of Vornado and JBG SMITH operated in a manner so that each qualified as a REIT immediately after the Separation and at all times during the two years after the Separation.

However, if either Vornado or JBG SMITH failed to qualify as a REIT following the Separation, then, for our taxable year that includes the Separation, the IRS may assert that JBG SMITH would have to recognize corporate-level gain on assets acquired in the Separation.

Changes in tax laws could negatively impact us.

federal income tax laws governing REITs and the administrative interpretations of those laws may be amended at any time, potentially with retroactive effect.

Changes to the U.S.

federal income tax laws, including the possibility of major tax legislation, could have a material and adverse effect on us or our shareholders.

We cannot predict whether, when, to

what extent or with what effective dates new U.S.

federal tax laws, regulations, interpretations or rulings will be issued.

Prospective investors are urged to consult their tax advisors regarding the effect of potential changes to the U.S.

federal tax laws on an investment in our shares.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

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You can find many of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans," "would," "may" or other similar expressions in this Annual Report on Form 10-K.

Investors are cautioned to interpret many of the risks identified under the section titled "Risk Factors" in this Annual Report on Form 10-K as being heightened as a result of the numerous adverse impacts of COVID-19.

In particular, information included under "Business," "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains forward-looking statements.

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● whether any or all of the other three demand drivers discussed above will fail to materialize;

● whether the plan to build a sports and entertainment anchor in National Landing will materialize at the planned scale, or at all;

● reductions in or actual or threatened changes to the timing of federal government spending;

● changes in general political, economic, public safety and competitive conditions and specific market conditions;

● changes in general political, regulatory, economic, public safety and competitive conditions and specific market conditions;

● the risks associated with real estate development and redevelopment, including unanticipated expenses, delays and other contingencies;

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● the ability to control our operating expenses;

● the risks related to co-investments in real estate ventures and partnerships;

● the ability to renew leases, lease vacant space or re-let space as leases expire, and to do so on favorable terms;

● the risks related to co-investments in real estate ventures and partnerships, including the ability to source joint venture capital for our development pipeline;

● the ability to renew leases, lease vacant space, re-let space as leases expire, or strategically take buildings out of service, and to do so on favorable terms;

● the economic health of our tenants;

● fluctuations in interest rates;

● the liquidity of our common shares;

● the supply of competing properties and competition in the real estate industry generally;

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● compliance with applicable laws, including those concerning the environment and access by persons with disabilities;

● increased investor focus and activism related to ESG matters;

● the ability to meet certain environmental targets;

● increased investor and government focus and activism (both positive and negative) related to sustainability and social responsibility matters;

● terrorist attacks, acts of violence and the occurrence of cyber incidents or system failures;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors